Apple reduces App Store fees for small businesses

Hemani Sheth Mumbai | Updated on November 18, 2020

The new commission will be applicable starting next year

Apple on Wednesday announced the App Store Small Business Programme, a new commission structure for small and individual developers on its App Store.

As part of the programme, Apple will provide a reduced commission on paid apps and in-app purchases as compared to its standard commission rate of 30 per cent to small and individual developers.

Apple will charge a reduced 15 per cent commission to developers who have qualified for the program. Developers who have earned up to $1 million in proceeds during the previous calendar can qualify.

The programme is meant to support small businesses.

“Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. We’re launching this programme to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love,” said Tim Cook, Apple’s CEO.

As part of the programme, existing developers as well as new developers who earn up to $1 million in 2020 for all of their apps will qualify for a reduced commission rate of 15 per cent.

However, if a business, qualified for the programme, surpasses the $1 million threshold, the standard commission rate of 30 per cent will apply for the rest of the year. If their business falls below the $1 million threshold in a future calendar year, a developer can further qualify for the reduced commission rate for the following year.

The programme is set to begin from January 1, 2021. Apple will provide comprehensive details about the programme in December.

“The savings mean small businesses and developers will have even more funds to invest in their businesses, expand their workforce, and develop new, innovative features for app users,” Apple said.

Criticism for app store fees

App Store commission has been a much debated issue among developers. Two leading app stores- Apple and Google have faced criticism over their app store commission from developers across the globe.

Apple’s 30 per cent ‘Apple Tax’ has drawn flak from tech giants such as Microsoft, Facebook and Spotify as well as small businesses.

In September, a group of developers including Spotify, ‘Fortnite’ maker Epic Games, Basecamp and ‘Tinder’ parent Match Group had banded together to form an independent non-profit organisation called Coalition for App Fairness (CAF) to urge Apple and other app store owners to make changes to their business practices. The 30 per cent ‘Apple Tax’ had been one of the three key issues highlighted by CAF.

Google earlier this year had also received backlash from developers in India for its updated Payments Policy on the Play Store.

Google in September had announced that it would require apps to use its own payments system with a few exceptions. It will be charging a 30 per cent transaction fee for all apps.

The tech giant had faced criticism for this from multiple Indian start-ups, especially Paytm. This had led to Google deferring its decision to update the new policy from September 2021 to April 2022 “being mindful of local needs and concerns.”

Apple on the other end has said that, “Developers of all sizes have built successful businesses while benefiting from the App Store’s global reach encompassing users of the more than 1.5 billion Apple devices around the world in 175 countries.”

Published on November 18, 2020

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